John Cameron's personal blog

Serious discussion about your financial position now - and in the future.

Redundancy – Beware An Unwanted 65th Birthday Present – More Tax!

Redundancy payments are in the air again, with the WA Government announcing plans to cut the number of public servants.

However, there is a nasty little surprise lurking in the tax laws for people over age 65. The tax treatment is very different either side of 65.

Just to be clear, what we are talking about are specific REDUNDANCY PAYMENTS. These are separate from superannuation and a range of other exit payments. Broadly speaking, a redundancy payment is a specific extra payment that is made when an employees’ job has been abolished, and the person is no longer required. Redundancies can be either voluntary, or not.

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Securing Your Future - Where To Look For Income In Times Of Low Interest

The following article "Where To Look For Income In Times Of Low Interest" was written by John Cameron and appeared on pg 2 of The West Australian - Financial Planning Supplement - 21st August 2017.

The figures quoted are taken from special research into retirement incomes, undertaken by Delta Research and Advisory at John Cameron's behest.

More will follow over coming weeks.

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The Culture Wars Continue

Once again, the Commonwealth Bank is in the firing line. This time it is under a cloud for, allegedly, not meeting its obligations to report suspicious financial transactions – and the press is having a field day.

Foremost among their comments/analysis/hysterics (pick your own descriptor) is the conclusion that the CBA has a poor culture, and they need a better one. Well, call me pedantic, but I think that qualifies as nothing more than a giant SBO (Statement of the Bleeding Obvious), and a solution needs more than endless SBO’s, but some deeper analysis.

Firstly, what is culture? In this context it should refer to the values that drive expected norms of behaviour – that is, how are people expected to behave, as dictated by beliefs and values of the workforce. If somebody does the wrong thing, they will be pulled up by their peers, not just by the managers. It cannot be captured in policy procedures, memoranda, protocols etc.

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Four Points to Note About Recent Rants, Furphies and Beat-Ups Around Tax and Franking Credits.

There has recently been serious concerns expressed in major media, about investors in account based pensions (it applies to other vehicles as well, but most of the rant has been about pensions).

The “concern” goes like this: “because a lower company tax rate will mean companies are paying lower tax, the will have fewer franking credits to pass on, and investors will get smaller tax refunds.”

Oh, save me. There is a serious misunderstanding here.

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Wanted – A Better Way To Measure Risk

The twin elements of investment are risk, and return. We are constantly told that you cannot get a better return, without taking on more risk (but the reverse doesn’t apparently apply. If you invest in higher risk investments, it doesn’t follow that higher returns will necessarily eventuate. And, here the argument becomes fairly circular – more risk means more risk, which may mean no return, or total loss - if you get my drift).

The current way of measuring risk, is to look at the average volatility of returns over an extended period (in practice it is a bit more technical, but this is the essence of it). The more volatile the returns, the riskier the investment, and vice versa.

This way of measuring risk has been around since the 1950’s, and it was certainly a big improvement on what went before.

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